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President Obama targets power plant emissions in new climate change plan

On June 25, President Obama unveiled a "Climate Action Plan" including measures designed to reduce greenhouse gas emissions in the United States using the President's executive powers. Greenhouse gas emission standards for power plants are a prominent feature of the President's plan.

In a memorandum released the same day as the plan, President Obama directed U.S. EPA to promulgate "new source performance standards" for greenhouse gas emissions from both new and existing power plants under section 111 of the Clean Air Act.

EPA previously proposed new source performance standards for carbon dioxide emissions from new fossil fuel-fired power plants on April 13, 2012. Final standards for new power plants were initially expected in March 2013, according to EPA's Uniform Agenda. However, after receiving more than two million public comments on that proposal, U.S. EPA prepared a new proposal for new power plants, which is currently under review by the Office of Management and Budget. The President directed EPA to publish the proposal for new power plant standards by no later than September 20, with a final rule to follow "in a timely fashion after considering all public comments, as appropriate."

In an even more ambitious move, President Obama also directed EPA to propose, by June 1, 2014, the first-ever new source performance standards for greenhouse gas emissions from existing U.S. power plants, with a final rule to follow no later than June 1, 2015. As described in the President's memorandum, EPA will rely on Clean Air Act Section 111(b) to directly set greenhouse gas emission standards for any existing power plant that undergoes a major modification or reconstruction, and will also employ its rarely used authority under Section 111(d) of the Act to require states to set emission standards for unmodified existing power plants in accordance with federal guidelines. The President called for EPA to require submission of "state implementation plans" with greenhouse gas emission standards for unmodified power plants by June 30, 2016.

Although President Obama's deadlines for the new power plant regulations are clear, EPA has not hinted at what form the standards for existing power plants will take. The April 2012 proposed standards for new power plants would have required compliance with electricity-output-based limits in pounds of carbon dioxide per megawatt hour. EPA may choose the same approach for existing power plants, or it may attempt to design a more flexible regime with a market-based system, such as emissions trading. The President's June 25 memorandum specifically instructed EPA, to the greatest extent possible, to seek "direct engagement with States" and to "develop approaches that allow the use of market-based instruments, performance standards, and other regulatory flexibilities."